Microsoft 'on track' in first quarter

CBS.MarketWatch.com

SAN FRANCISCO (CBS.MW) --Microsoft executive Jeff Raikes, who admitted Monday at the Banc of America Securities investment conference that 90 percent of his net worth is tied up in Microsoft stock
MSFT, +1.08%
joked that he "was a little pissed at Steve Ballmer," who talked down the worth of that holding last week by describing the stock as overvalued. Raikes took the opportunity at the conference to reinforce the company's vision of the "PC-plus era" and also said Microsoft is on track to meet expectations for its first quarter. The First Call profit estimate is 34 cents a share. Windows 2000, he said, remains on track for release by the end of this year. Raikes said 1999 was very good in terms of core-business and geographical growth and conceded that it won't be easy to match that performance in fiscal 2000. The company, he said, spent $3 billion on research and development in fiscal 1999 and expects to boost that figure to $3.8 billion this year.

Siebel plots international growth

Siebel
sebl
executive Howard Graham said the third quarter is "typically a little soft for us." The First Call consensus estimate for the quarter is a 25-cent-per-share profit. Graham said the company is working to return its presence in Western Europe to where it was a year ago. The company intends to expand in Asia and Latin America, he said. Graham also said he expects margin compression over the next year or two. He boasted that Siebel's license revenue is four times that of any competitor.

EMC's $10 billion plan

Dave Donatelli, vice president of new business at EMC, said the company feels very comfortable in becoming a $10 billion entity by 2001. He said EMC
EMC, -2.25%
holds 35 percent of the market in the data-storage space. The pending acquisition of Data General "helps us move to the middle market" in data storage. Donatelli said software accounts for 14 percent of revenue today that the company sees that growing to 15 or 20 percent in the future.

Growing with the flow

Time Warner
TWX, -28.57%
Senior Vice President Joan Sumner said the company is currently growing cash flow at midteen percentages, compared with last year. Music is "currently experiencing softness," but the company's other segments, she said, offset this problem. Sumner also said the company's cable networks should grow cash flow by 20 percent year-over-year and that the entertainment segment should grow cash flow by double-digit percentages.

The company's cable systems should increase cash flow by 10 to 11 percent year-over-year. Sumner also mentioned that 85 percent of these cable systems will be digital-ready by the end of this year. RoadRunner, the company's cable-based high-speed Net access service, should have 500,000 customers by the end of this year, Sumner said. "The early feedback has been extremely positive," said Sumner, who added that customers who responded to a survey "thought of RoadRunner more highly than AOL."

Time Warner shares rose 1 3/4 to 60 7/8 Monday.

Getting personal

Motorola executive Janiece Webb said the company will bring the Internet to wireless devices in an effort to enable personal networks. Webb said the company is working closely with Sun Microsystems on "futuristic" initiatives. She added that Motorola
"
is positioned to take advantage of the trend toward personal networking and is working on "world-class alliances to deliver these promises."

Shares of Motorola climbed 3 5/8 to 86 1/2 Monday.

Shelf life

Unocal Chief Executive Roger Beach spoke of the company's "major sustaining businesses," including energy production in the Gulf of Mexico and Thailand.

Beach said Unocal
UCL, +0.00%
is a major player on the Gulf of Mexico shelf. He noted that the company is heavily weighted toward natural gas -- with that category accounting for 85 percent of production, he said. The company, he said, is on track to maintain production at year-ago levels on the Gulf of Mexico shelf. "We're thriving on the shelf," he said. Unocal supplies a third of all Thai power and, Beach said, continues to augment its position there.

Meanwhile, Unocal has made three deep-water discoveries in Indonesia, where, the CEO said, the company is "just getting started."

Shares of Unocal closed the day up 1/2 at 37 3/16

Outsourcing ahead

Manufacturing contract provider Solectron Corp.
SLR, +0.00%
CFO Susan Wang said the company sees outsourcing becoming the primary strategy for original equipment manufacturers. Wang said the company is set to complete a transaction with IBM
IBM, +0.78%
in the next few days in which Solectron is supporting IBM's Netfinity product line. With this transaction, Solectron will have a new product introduction center in Scotland. The pending acquisition of SMART Modular Technologies allows Solectron to expand service capabilities, Wang said. Wang also said net income has grown 54 percent a year for the last seven years. She sees "significant upside" in the company's telecommunications segments.

Solectron shares rose 2 1/8 to 70 1/8.

Web angle

Citigroup's
C, -0.24%
Robert Willumstad, head of global consumer lending, said the company will launch a new credit product designed for Net purchases, called E-credit. With E-credit, Citigroup will initially target its existing customers and branch out to other customers in the fourth quarter. Willumstad sees overseas growth going forward. Willumstad said Citigroup's business income was up 37 percent to $2.2 billion in the first-half of 1999. He added that the company strives to be the low-cost producer in the credit card business.

Citigroup shares fell 7/8 to 42 7/8.

In pursuit

Clear Channel Communications
CCU, +0.60%
Chief Executive Lowry Mays said his company will pursue the ownership of additional TV stations in markets where it already has a presence if it proves "economically beneficial." On the television front, Sinclair Broadcast Group's
SBGI, +0.06%
recent second-half cash-flow warning shouldn't necessarily be used as a barometer for the entire TV industry. Mays said Clear Channel's 19 stations should show "good growth" in the third and fourth quarters. The Internet is becoming an increasingly important part of Clear Channel, he said, explaining that the company has streaming audio and other initiatives. Although over the next five years, Mays said, the Net will be a key part of the company's revenue, there are no plans for an IPO of the Internet segment.

Teradyne's
TER, -0.90%
Thomas Newman, the electronics and telecom testing-equipment maker's vice president, said speed and bandwidth are driving the company's business. In the first half of 1999, 78 percent of the company's revenue was driven directly by the Internet. The company expects shipments this quarter in the $500 million range. The company's high integration product will ship about 150 units this quarter.

Teradyne shares rose 2 13/16 to 40 1/16.

Homeward bound

RCN's
rcnc
executive vice president of West Coast operations, Paul Sigmund, said the company brings fiber networks within 900 feet of a residential home. Sigmund said RCN only uses 15 percent of its capacity, leaving room for additional capacity without additional capital spending. Sigmund sees bundled services as an avenue for revenue and growth for the company. The company maintains one network designed to build and maintain its four services. The company also hopes to see more of its customers "on Net." Sigmund said when converting off-Net users to on-Net users, the move can translate into a tripling or quadrupling in gross margins.

Shares rose 2 3/8 to 46 7/8.

Amazon.com to expand distribution

At the Banc of America confab, Joe Galli, Amazon.com's chief operating officer and president, highlighted the company's progress in new products and geographic expansion, increasing its auction efforts and investments. He said the company has been able to expand aggressively by building out its distribution capacity in advance of demand. The company is planning three more distribution centers in addition to the four current U.S. locations. Expanded U.K. and German capacity is on the way.

In the second quarter, the company reported $11 million in revenue, of which 70 percent was business from original customers. He said the company has achieved a commanding position in sales vs. its competitors, which include Barnesandnoble.com, CDNow, EToys and Reel.com.

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